Much has been made of the Supreme Court's decision earlier this month in KBR, Inc. v Director of the Serious Fraud Office, in which it confirmed the limits on UK authorities' reach overseas in anti-corruption investigations. However, our view is that this should not be seen as a paradigm shift and in fact there have been other developments whilst this case has been running that are more significant.
KBR stemmed from a 2017 investigation by the SFO (the UK’s anti-corruption agency) into KBR’s UK subsidiary, and the SFO’s attempt to obtain documents held by KBR in the US, using its power to compel production of documents under section 2(3) of the Criminal Justice Act 1987. The SFO took the view that this power’s scope was not limited to the UK, and that it could be used to compel non-UK persons to disclose documents held outside the UK, without going through the well-established route of liaising with local authorities via the Mutual Legal Assistance (MLA) process. When a KBR officer flew over to London (voluntarily) for a meeting with the SFO, she was served mid-meeting with a notice requiring her to produce the documents within two months, on pain of criminal penalties.
The Divisional Court took the SFO’s side in 2018, largely on the basis that the SFO needed these expansive powers to properly investigate cross-border corruption. The court decided that the SFO’s reach extended to any company with a ‘sufficient connection’ to the UK; KBR was in scope because it had approved and processed payments by the UK subsidiary, which the SFO was investigating. The Supreme Court has now rejected this view, concluding that it would infringe on other nations’ sovereignty and that the SFO is already able to obtain documents held overseas by non-UK persons via MLA (even though that is often a slow process).
There has been some suggestion that this is a paradigm shift signalling a less aggressive UK approach on jurisdiction, but our view is that this is better viewed as a return to normality – the SFO sought to argue for a broader interpretation of its powers, but was ultimately checked by the courts. However, while this case has been running, the SFO has seen its reach expand through other means that are on firmer footing than the now-overturned 2018 decision. In 2019, the UK introduced overseas production orders (or OPOs) for cross-border criminal investigations, which are likely to represent a paradigm shift and offer the potential to identify important evidence in any case. A bilateral agreement with the US, concluded in 2020, enables the SFO (and other UK authorities) to obtain OPOs in UK courts, which require US communication service providers to produce electronic evidence on a very short timescale (one week), without needing to liaise with US authorities.
OPOs are only available for investigations targeting non-US persons, and there are various other safeguards in place – further detail is set out in our June 2020 Client Alert on OPOs, available here. However, KBR demonstrates the appetite of UK authorities to exercise their powers over non-UK entities, and we expect the SFO and other UK authorities to make increasing use of OPOs in 2021.
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